It’s Still the Debt, Stupid!

On Thursday, 3 November 2017, House Republicans unveiled their plan to update the nation’s
tax code. Such an update has been sorely overdue because, if put into law, it will mark the first time in over 30
years that our tax laws will be upgraded. It would be hoped that the final version of the tax plan would simplify
the current tax code, eliminate inequities, update the business tax system to make the U.S. more competitive
in the world marketplace and
remove barriers to investment and job creation. A plan that does this has the potential to lead to higher wages,
job creation, and the generation of greater economic opportunity with a larger and more dynamic economy.

The GOP tax plan was immediately blasted by Democrats who are likely to oppose just about
any legislation proposed by President Trump and the Republicans. The proposed tax plan even drew objections from
a few Republican legislators who found that some aspects of the plan would not be beneficial to their home
states.

Vigorous opposition from the Democratic side of the aisle was expressed by ultra-liberal
Senators Liz Warren of Massachusetts and Bernie Sanders of Vermont. Senator Warren railed that: “. . . right
now, the Republicans are planning to rain about $2 trillion in tax giveaways down on these giant corporations.”
While Senator Sanders complained that: “Do you think it’s a good idea to cut Medicaid by a trillion dollars, cut
Medicare, cut education, cut environmental protection in order to give $1.9 trillion in tax breaks to the wealthiest
people in this country? . . .”
“It’s not only that it makes the rich richer at a time of massive income and wealth
inequality, . . . it fulfills the Koch Brothers’ agenda. Their agenda is to basically end every federal program,
whether it’s Social Security, Medicaid, public education. They’re after privatizing virtually every public program
that helps working families in order to make the very, very rich richer.”
(Ref. 1)

In truth, no plan originating in Republican quarters would be acceptable to
either of these two and to many other Democrats, particularly when the proposal is drawn up with no input from
Democrats. It is highly unlikely that the tax plan, as it now stands, will see the light of day. If and when an
acceptable plan emerges, it will likely be quite different from what is now on the table. Right now, the plan has
features that will displease someone – perhaps the best indicator the plan might be a good one. The “Republicans
focused on findings by Congress’ nonpartisan Join Committee on Taxation that the bill would lower taxes across all
income levels over the next several years {while the} Democrats returned repeatedly to a section of the analysis showing
taxes would go up beginning in 2023 for some 38 million taxpayers or families making $20,000 to $40,000 a
year.” (Ref. 2) Clearly, both parties are pandering to the
“middle class” where most of the voting power resides. However, with any luck, the good features of the tax plan
will remain in any potential final version, while the bad features will be alleviated or dispensed with. Based upon
the past ongoing failures of Republican and Democratic Senators and Congressmen to come to an agreement on anything,
the odds of enactment of updated and meaningful tax legislation are not very high. As in recent years, the ultimate
benefits of updated tax legislation to all Americans take a back seat to petty party politics.

A Quick Summary of Some of the Good and the Bad in the Tax Plan

THE GOOD

Briefly, the good features of the Republicans’ plan include the simplification of
the income tax code for the average tax payer. The current income tax code is outdated, incomprehensible, inequitable,
overly expensive to manage and enforce, and an unnecessary waste of taxpayers’ time and money. The proposed plan
simplifies the tax code by eliminating a host of unnecessary and inefficient provisions designed to benefit special
interests and it also simplifies the process of tax filing by doubling the size of the standard deduction, while
collapsing 7 rates into 4.

The Republicans’ plan drastically lowers the tax rates for corporations, small businesses,
and lower- to moderate-income individuals and families. Lowering the corporate tax rate from 35% to 20% would make
the U.S. competitive with the rest of the world.

Here, nearing the end of 2017, “The U.S. has the largest debt in the world and one
of the largest as a share of GDP. [Emphasis mine] That’s likely to emerge as a key sticking point in the
debate over President Trump’s proposed tax plan – which is looking increasingly like a budget-buster. Republicans’
tax-cut wish list exceeds $5 trillion, according to multiple estimates, and many experts doubt that the economy
would get enough of a boost from the proposed cuts to make up the shortfall.”
(Ref. 4)

The U.S. is in debt to the tune of $21.0 trillion, while the country with the next highest
debt is Japan with a debt of $9.9 trillion. The U.S. comes in at 3rd place globally in terms of Government Gross
Debt as a Share of GDP with a debt-to-GDP ratio of 108.3%. The other two countries ahead of the U.S. in this
category of national debt are Japan with a debt-to-GDP ratio of 239.2% and Italy with a debt-to-GDP ratio of
132.8%. [4]

Trump's Tax Reform “Framework Plan”

President Donald Trump began the process of instituting changes to America’s antiquated
system of taxation in September of 2017. As usual, the Trump administration’s new tax proposal was long on
self-aggrandizement and very short on factual details. It drew immediate fire from both sides, but it gained enough
Republican support to allow a final version of tax reforms to pass with a simple majority in the Senate
(50 yes votes instead of 60 yes votes, otherwise).

“The plan, meant to be a framework for Congress to negotiate into legislation, still has
missing parts. And as the House prepares to vote on the Senate’s budget plan Thursday, some lawmakers, including
Republicans, still have qualms with parts of the tax framework. - - -
“. . . The framework lowers the corporate tax rate to 20 percent from 35 percent. Trump
initially wanted to lower it to 15 percent . . .
“It also lowers the tax rate for small businesses to 25 percent. The majority of small
business owners would {supposedly} use the extra cash to expand businesses and hire additional employees . . .
“The plan {also} eliminates the so-called death tax, or estate tax. The federal estate
tax, which typically affects wealthier Americans, is a tax on property transferred after the owner’s death.
“. . . With the framework, Republicans hoped to simplify the tax code and the way Americans
file their taxes. The plan collapses the number of brackets from seven to as little as three. {Hopefully, the tax
code simplification would enable the average American to simply file his/her tax return on a postcard. Because
the plan would streamline the tax process, less people would potentially need to hire tax accountants, lawyers and
firms. Trump has said he wants to put H&R Block "out of business."} It’s yet be seen if America’s entrenched
lawyers and accountants will stand still for this significant loss of their income!
“{Perhaps most controversial, t}he framework includes multiple tax cuts for high-income
taxpayers, including the elimination of the Alternative Minimum Tax. . .
“{Another controversial aspect of the Trump plan is the elimination of} state and local
tax deductions, {which would be construed by many as resulting in double taxation.}
“{Perhaps the most significant aspect of the proposed tax revision plan is its
impact on the federal deficit!} The plan would result in approximately $2.2 trillion of net tax cuts --
a blow to the national debt, the Committee for a Responsible Federal Budget said.
“{On the other hand,} some advocates say eliminating SALT {the deduction for State
And Local Taxes} could generate at least $1.3 trillion in revenue over a decade for the federal
government {which would help to reduce the federal deficit.}
“{When all is said and done,} . . . the plan {is} lacking in details, making it difficult
for policy experts to come up with concrete estimates of the framework’s impact.
“ ‘People can make assumptions about what the details will be and make estimates based on
their assumptions, but you won’t really know until the details are in.’ “
(Ref. 5)

“The framework proposes cuts to personal and business tax rates, in line with previous
Trump campaign and House Republican proposals. It would simplify the tax code by scrapping most itemized deductions
and reducing the number of personal income tax brackets. Many important details have been left out, however, such as
the income levels the proposed tax brackets would apply to.”
(Ref. 6)

One controversial aspect of Trump’s plan is that, apparently, it appears as if the highest
earners
would benefit far more than anyone else. Whereas the bottom four income quintiles would gain from 0.5% to 1.2% in
after-tax income in 2018, the top 1% would gain 8.5%, and the top 0.1% would gain 10.2%. Such should not be
the case! Top earners should not benefit more than the lower earners and, in all fairness, should benefit
less or not at all. It remains to be seen if this inequality will remain in the final version of the plan. In any
case, it is almost a certainty that any revised tax plan will not satisfy everyone. Some will gain and some will
lose. But the true significance will be the net result. Will the American people as whole, be better off with the
new plan than we were under the old arrangements?

While Donald Trump boasts that his plan will result in the biggest tax cuts ever for
Americans, the reality of America’s indebtedness calls for an increase in America’s tax bill rather than a tax
cut. It remains to be seen if our Washington politicians will bite the bullet and do the right thing for America,
rather than continuing to pander to those who wish to avoid the fiscal reality that stares us in the
face.

The American people have waited too long for meaningful action on the growing federal
deficit and on much needed tax reforms. The longer we wait to address these problems, the larger the bill our
children and their children will have to pay down the road, in higher taxes, lower standards of living, or both.
That is a cruel hard fact.

“We, the American public, must stop looking for the easy and ineffective budget solutions
and instead, we must show that we are willing to accept the difficult and effective solutions. We need to get rid of
the delusion that a small tax increase on the rich, combined with cuts in not-very-important spending categories
will somehow deliver us from fiscal ruin. We need to accept the fact that what’s necessary is an extreme makeover
with a heavy dose of tough love. What we don’t need are politicians who keep telling us that they have simple and
painless fixes that the politicians in the other party are against. What we don’t need are politicians who tell us
that we can wait until after the next election to fix the problems. A pox on the houses of both
parties!” (Ref. 7) It’s time to stop kicking America’s financial
problems down the road!

The GOP House Tax Reform Plan

Shortly later in 2017, the Republicans in the House of Representatives came out with their
version of a tax reform plan, which was dubbed the Tax Cut and Jobs Act. “The 429-page 'Tax Cut and
Jobs Act' includes a broad set of proposed changes to the corporate and individual tax system, building off a
nine-page framework that the White House and congressional Republican leaders dropped in September.”
(Ref. 8) Some key features of the House GOP Tax Cut and Jobs
Act are: (Ref. 9)

“1. Simplification: The proposed plan would vastly simplify the tax code by eliminating a host of
unnecessary and inefficient provisions designed to benefit special interests. It would also simplify the process of
tax filing by doubling the size of the standard deduction, which would cut in half the number of taxpayers who need
to itemize their deductions. In addition, the condensed rate structure—which collapses seven rates into four—also
simplifies the tax code.
“2. Lower Rates:The proposed plan would drastically lower tax rates for corporations, small
businesses, and lower- to moderate-income individuals and families. The new 20 percent corporate tax rate would
help make the U.S. competitive with the rest of the world, and the top 25 percent small business or pass-through
tax rate would go a long way toward stimulating entrepreneurship, job creation, and income growth across all income
groups in America. - - -
“3. Business Taxes: The combination of business tax reforms—including a top 20 percent corporate
tax rate, five years’ worth of full expensing, and a modernized international tax system—would provide a huge boost
to the U.S. economy and its workers. These business changes have the potential to bring trillions of dollars back
into the United States and to significantly boost economic output, jobs, and incomes within the U.S. This tax
proposal marks a huge improvement over the status quo. It would go a long way toward making America more
competitive . . . “

The tax reform package maintains the top marginal rate of nearly 40%. Maintaining a high
top rate for wealthy Americans makes the plan more politically palatable, more appealing to average Americans, and
helps to somewhat alleviate the negative impact on the need to reduce the federal debt of the tax reform
plan.

The new income brackets would mean significant tax cuts for most Americans making below
about $250,000 while a significant portion of upper-income earners, would see higher tax bills. Additionally, the
plan effectively does away with the marriage penalty.

Although the stated top tax rate is 39.6 percent, the bill actually includes a
significantly higher 45.6 percent rate that would kick in at incomes of $1 million for individuals and $1.2 million
for married couples.

The Tax Plan would eliminate the Alternative Minimum Tax which many find to be an outdated,
unfair, and complicated system.

The GOP plan roughly doubles the standard deductions from $6,350 to $12,000 for
individuals, and from $12,700 to $24,000 for married couples. This would go a long way toward helping Americans
keep more income. Doubling the standard deduction also vastly simplifies tax filing for tens of millions of
Americans who would no longer need to itemize their deductions. This would make tax filing easier and would make
postcard-sized tax returns a reality for certain taxpayers. One estimate is that an additional 22 million taxpayers
could avoid the headache of keeping track of all their itemized deductions. When combined with the plan’s
elimination of state and local income and sales taxes, the number of taxpayers who could avoid having to itemize
their deductions would increase even more.

The proposed tax plan would partially eliminate state and local tax deductions by getting
rid of the deduction for income or sales taxes, and by capping the deduction for property taxes at $10,000. These
deductions shift the burden of high-tax states onto low-tax states, and spread a portion of high-income earners’
taxes onto lower- and middle-earners’ tax bills. Eliminating the sales and income tax deductions would be a huge
benefit to at least 85 percent of Americans. Eliminating these deductions would also provide a huge boost in federal
tax revenues. The plan’s $10,000 cap on property tax deductions would help limit the subsidy to very wealthy
homeowners in high-tax states and according to IRS data, the only taxpayers who would be affected by this cap
are those who make well over half a million dollars a year.

On the negative side, are arguments that eliminating the deductions on state and local
taxes effectively amounts to double taxation.

Permanently lowering the corporate tax to 20% percent from its current level of
35% is the single most important pro-growth change included in the Republican’s proposed tax plan. U.S.
businesses currently face the highest statutory corporate tax rates in the developed world. The United States
ranks consistently as one of the worst in business tax environments in the world. Over the past few decades,
countries around the world have steadily lowered their corporate tax rates, leaving American businesses
behind.

Another pro-business aspect of the tax plan is that of lowering the “pass-through” tax
rate. Most businesses, including the vast majority of small businesses, are taxed as S corporations
or partnerships. Rather than pay taxes at the business level, the income they earn is “passed-through” to the
individual owners who pay taxes on their individual tax returns. Pass-through businesses account for about
two-fifths of all payrolls in the U.S. The GOP tax proposal would reduce the tax rate these businesses pay to 25%
from as high as 40%. This would help small firms grow and have a positive impact on job creation and wage growth
in the United States.

The House GOP plan would repeal the estate tax after 5 years, and would immediately double
the value of the basic exclusion from its current level of $5.45 million. Also, the plan eliminates the alternative
minimum tax in both the corporate and individual tax
codes.[9]

Simplifying the Tax Code

The first article that I wrote, way back in 2005, called for relief from the inane
federal income tax code that inordinately burdened every taxpayer in these United States.
(Ref. 10)

In that article, I made the following points concerning the unnecessary burdens imposed on
the American Taxpayer:

1) In order to help me prepare my 2005 income tax return, I needed to use J. K. Lasser’s Your Income Tax
2005 which was 768 pages long with 49 chapters. In addition, there was a 21-page supplement. Some 12-years
later, the size of this annual income tax aide has only grown.

2) I estimated the time I spent in the course of a year to record tax related transactions at some 60 hours
(5 hours per month), the time to “peruse” J. K. Lasser’s Your Income Tax 2005 at 40 hours, and the time
to actually prepare and submit my tax returns at 16 hours. This totaled some 116 hours of my time. This wasteful
time burden has only grown over the years.

3) Each and every year, we, as a nation, are wasting the time of taxpayers and the resources that comprise the
legal, accounting and other tax preparation organizations. In addition, we pay for for the bureaucracy that we
call the Internal Revenue Service (IRS) and other governmental organizations that are involved in tax collection
(including preparing and updating the tax codes, investigations of tax fraud, and prosecution, etc.). This waste
of resources shows up in the cost of goods and services produced and in the reduced competitive position of the
goods and services that we export because of the costs of lawyers, accountants, and government bureaucrats that
must be included in the prices that go along with these goods and services.

4) According to an article on page 33 of the April 15th 2005 Boston Herald, it took Americans
some 6.6 billion hours to do the paperwork for their tax returns. According to the government’s budget office,
tax work “tower{ed} over the entire paperwork burden for the rest of the federal government.” By 2005, the income
tax code was an incomprehensible, multi-thousand-page maze of inane regulations. The tax code has continued to
grow since then. The tax code is so incomprehensible that even the IRS can’t understand it. It has been documented
that, as often as not, if you ask them for a ruling, they will give you an incorrect interpretation.

5) The solution that I proposed back in 2005 was the replacement of the income tax with a consumption tax, such as
a national sales tax or value added tax (VAT). The rationale was simply that since the rich buy more than the poor,
they would therefore pay more with a consumption tax than the poor. The more a person would make, the more that
person would spend and buy, and therefore the more that person would pay in terms of taxes.

6) You and I would stop wasting our time preparing income tax returns. Lawyers and accountants could turn their
talents to more useful pursuits.

7) As Malcolm Forbes noted in 1993 (How to win the tax issue: flatten it, July 13, 1993), “Whatever the
variant, a flat {or consumption} tax would trigger a volcano-like economic boom. The prodigious amount of brain
power and time now spent on coping with our currently incomprehensible tax code would be released for productive
uses. This redirection alone would hugely stimulate the economy.
“The flat tax would largely eliminate a powerfully corrupting influence on our political
life. Countless millions of dollars are given for tax-code-related purposes – fending off destructive changes,
pushing special-interest amendments.
“Fairness would be enhanced: The more you make, the more you pay. Striking disparities in
taxes owed on similar incomes would end.”

8) Again, in a 1994 article, Forbes wrote that the elimination of the income tax code, “would redirect an
immeasurable amount of American brainpower from the numbing exercise of coping with the incomprehensible tax code
to more productive purposes. There would be an enormous increase in efficiency.” In the same article, Forbes
estimated that the savings from eliminating the federal income tax would amount to “$100 billion now spent filling
out tax forms and other forms of compliance and another $100 billion wasted from investments being made for tax
(avoidance) rather than economic purposes.” Eliminating the income tax, “would get rid of a profoundly corrupting
influence on our political life: the countless millions of dollars now showered on politicians and bureaucrats to
influence tax-related rules and legislation.” By 2017 the amount of dollars wasted on tax compliance and tax
avoidance has only grown significantly greater.

Two years later, in 2007, I again wrote that the tax code was still overly burdensome,
complex, irrational, expensive and getting worse.
(Ref. 11)

Deroy Murdock, in an article tilted, Rationale for complex Tax Code falls flat
on page 17 of the April 17, 2007 edition of the Boston Herald wrote:

The Tax Code and its accompanying regulations and IRS rulings stretch longer than 71 Gideon Bibles stacked
side by side.

A typical taxpayer needs nearly 40 hours to complete Form 1040.

The IRS estimates that a self-employed person needs more than 80 hours to prepare their return, the equivalent
of a 2-week paid vacation.

In 1998, Money magazine asked 46 tax professionals to prepare returns for another hypothetical family. No 2
returns were the same! Calculated taxes owed varied from $34,240 to $68,912.

David Keating of the National Taxpayer Union has written that, "The Tax Code is so convoluted that no one
inside or outside the IRS understands it."

“ ‘According to the Tax Foundation, the total taxpayer cost for IRS administration,
enforcement, record keeping, tax filing, advice and collection was $194 billion last year {2006}. This
sum is roughly the size of the total federal budget in 1970.’ [Emphasis mine] The total taxpayer cost
of the IRS system is currently estimated to be $233 billion annually.”
(Ref. 12)

Here in the year 2017, simplifying the tax code makes more sense than ever. It would
reduce the compliance burden on citizens and corporations, reduce corruption, and help contribute to the reduction
of America’s indebtedness by stimulating business, making American goods and services more competitive in the
international marketplace, and eliminating considerable tax avoidance that is now so prevalent.

“People on both sides of the political spectrum agree that the tax code should be
simpler. Since 1986, the last time a major tax overhaul became law, the body of federal tax law – broadly
defined – has swollen from 26,000 to 70,000 pages [Emphasis mine], according to the House GOP's reform
proposal. American households and firms spent $409 billion and 8.9 billion hours completing their taxes
in 2016 [Emphasis mine], the Tax Foundation estimates. Nearly three quarters of respondents told Pew in
2015 that they were bothered "some" or "a lot" by the complexity of the tax system.”
(Ref. 6) This should be more than enough reason to justify a
simplification of our tax code.

While the tax code is overly complex, it can also be inequitable. “According to the Tax
Policy Center, 72,000 households with incomes over $200,000 paid no income tax in 2011.”
(Ref. 6)

Corporate Tax Reforms

Corporate tax reform has long been needed. The corporate tax code has put American
businesses at a major disadvantage relative to foreign competitors, encouraged the move of businesses to foreign
shores, and created the need to spend enormous amounts of corporate funds on legal advice on how to navigate the
byzantine regulations included in the tax code.

Republicans and the Trump administration are attempting to once-and-for-all end the
corporate tax code fiasco. Their plan to overhaul the corporate tax code would lower the corporate tax rate to
20%, from 35%, eliminate levies on all U.S. exports and impose a 20% tax on imports. It's a mix that is expected
to raise an estimated $1 trillion in federal revenue over a decade, according to the Tax Foundation.

The Trump/Republican plan would burn down the current tax code and replace it with
something entirely new. Indeed, the existing 35% corporate tax rate is the highest in the developed
world. But, because of loopholes, it produces less federal revenue, as a percentage of GDP,
than in most other countries. The current system also creates an incentive for companies to perform feats of legal
acrobatics, like relocating corporate headquarters and shuffling intellectual property to far-flung foreign locales,
to shield their balance sheets from the IRS.

The prosed tax code revision taxes corporate cash flow. That means it doesn't matter where
a company's headquarters are located or where its intellectual property is housed. All that matters is where it
sells its products. If it sells its products in America, it pays 20% on what it makes. If it sells its products
abroad, it pays no U.S. corporate tax at all.

The plan also simplifies the laundry list of deductions and carve-outs buried in the
current tax code.

It was estimated “that 100 consistently profitable Fortune 500 companies went at least
one year between 2008 and 2015 without paying any federal income tax. There is a widespread perception that
loopholes and inefficiencies in the tax system . . . are to blame.”
(Ref. 6)

Also, since the tax has the effect of essentially subsidizing exports and penalizing
imports, textbook economic models predict the revision will have the effect of strengthening the value of the U.S.
dollar by as much as 25%.[13, 14]

”Make the Rich Pay Their Fair Share!”

Liberal Democratic demagogues like Senators Liz Warren and Bernie Sanders continue to
trumpet their
propaganda that the “rich” don’t pay their fair share of taxes and that the proposed Republican tax reform plan will
favor the rich at the expense of the poor. It ain’t so! In truth, as of 2010, the United States had
reached the point where “over half of the people depend on some sort of government check, yet 50% of us have no skin
in the game and pay no federal taxes.” (Ref. 15) Things have only
gotten worse since 2010.

Like Senators Liz Warren and Bernie Sanders today, President Obama back in 2010 was
railing against the fact that some of the rich were paying at the same income tax rates as everyone else.
BUT what he and Senators Liz Warren and Bernie Sanders weren't and aren’t “telling the American
people is that
income tax rates are irrelevant. It’s the amount of taxes paid that is important. If you or I earn
$50,000 and pay 20% in taxes, that amounts to $10,000 in taxes. If a rich person earns $1 million and is taxed at
the same 20% rate, he pays $200,000 in taxes. The fact is – The rich pay much more in taxes than the rest
of us!” (Ref. 15)

“‘Tax breaks for the rich’ is the big lie come alive. Under the Bush tax cuts,
25 million Americans at the bottom half of the income scale have been wiped off the federal income tax rolls.
And the rich? The federal tax burden of the top 1% of earners has gone from 19% under Jimmy Carter (in 1980) to
39.4%. Meanwhile, the bottom 50% paid 3.1% of taxes in 2005. In 1995, they paid 4.6%.”(Ref. 16)

As of 2012 “. . . the top 1% of earners, or the so-called ‘Rich’, {were}
paying nearly 40% of all the taxes while the bottom 50% {were} paying about 3%. You tell me – who isn’t paying
their fair share?(Ref. 15)

Today, as it always has been, “It’s not the tax rates that are the issue. The real
issues are how much total revenue there is and how much total spending there is. And, historically, the
lower the tax rates the higher the tax revenues! Why? Because lower tax rates stimulate the economy. From a
government revenue perspective, if a 20% tax rate creates a $2 trillion economy while a 30% tax rate results in
only a $1 trillion economy, then it’s better to have revenue of 20% of the $2 trillion ($400 billion) instead of
the 30% of $1trillion ($300 billion).” (Ref. 15)

In 2012, I wrote, “As we come to the end of 2012, we have the President, members of the
House of Representatives and members of the U.S. Senate bickering over who to tax and how much to tax them. . . .
It’s all a smoke screen!!! The real issue is not who should pay higher taxes or how much, but how to
reduce our outlandish federal debt and curb the out of control federal spending!!(Ref. 17) The same is still true some 5 years later!

In 2012, “The United States {had} run up a deficit of more than $16.2 trillion,
which means that every citizen of the U.S. {was} in debt to the tune of over $51,600 and every single taxpayer in
the U.S., rich or poor, owe{d} more than $141,700.” (Ref. 18)
That was 2012. This is 2017 and the national debt now exceeds $20 trillion!

Reducing the Federal Debt

The total debt facing this nation has grown astronomically to $21 trillion in
2017. In 2011, “the federal deficit was so large that all federal revenues covered only mandatory
spending and interest on debt. All discretionary spending – defense and non-defense – {was} borrowed!”(Ref. 7) Some six years later, this financial pit has only grown
deeper.

Today, We “are penalizing America’s low wage earners, America’s businesses and all
Americans in general with our growing federal debt burden and the tax system that is paying for our indebtedness.
Our current income tax system penalizes low wage earners and small businesses with a tax burden that amounts to
about 26 - 30% of the cost of every product or service purchased.”
(Ref. 7)

There are only three ways to reduce the national deficit: 1. Spend less than the U.S.
receives in taxes, 2. Take in more in taxes that than the U.S spends, or 3. Spend less and take
in more revenue. But, raising corporate tax rates is not a solution! Neither is keeping corporate tax
rates as high as they are a solution! High Corporate tax rates hurt everyone. “It makes American products
and services less competitive in the global marketplace. It is unfair to America’s low income folks because
corporations treat the tax as a cost and include this tax in the price of the products and services they sell.
The price of every product that is sold by American companies has embedded in it corporate income taxes of 35%
or more. Everyone pays the price. Increasing corporate taxes to pay off the federal debt is
counterproductive – it sends business offshore and penalizes the people that it is supposed to help by raising
the cost of goods and services with which they need to live.(Ref. 7)Corporate tax rates need to be lowered not
raised! Lowering corporate tax rates will actually increase federal revenues, not reduce it. If tax rates
drop by 10% but sales increase by 20%, tax revenue goes up by 10%. Currently, America has the highest corporate tax
rates in the world, making the selling of American products abroad more difficult. On top of that, our current tax
code encourages companies to seek tax loopholes that keep profits overseas rather than returning back here.
America needs lower corporate tax rates and a revised tax code that eliminates tax loopholes and allows
foreign profits to be returned to the U.S. rather than being kept overseas. What is also needed is a simplified tax
code that significantly reduces the cost of tax compliance on the part of U.S. corporations.

Instituting tax reforms that reduce costs to American businesses is one sure way
to increase the sales of America’s goods and services overseas and at home. Increased tax revenues from this growth
in sales will then contribute to the reduction of America’s federal deficit. Remember: It’s the tax revenue,
not the tax rate that is important!

It’s Still the Debt

President Trump and the Republican legislators have initiated a major tax reform plan.
Trump’s proposal was meant to be a framework for Congress to use in formulating and negotiating the final tax
revision plan. Both the framework and the initial Republican House plan have missing parts that will require
substantial changes before a final plan is implemented. Hopefully, the end product will:

Greatly simplify the byzantine tax laws and code now in existence

Allow most American taxpayers to file their income taxes on nothing more than a postcard

Eliminate loopholes in the tax code that primarily benefit tax lawyers, accountants and their firms

Reduce exorbitant corporate tax rates that hobble American companies in the world’s market place

Produce significantly increased federal tax revenues to pay off the national debt.

“Never particularly grounded in reality, budget talks in Washington have an Alice in
Wonderland quality. Both Democrats and Republicans are trying to be identified as the party of fiscal responsibility
without broaching the two real steps needed to solve America’s budget crisis: meaningful tax
increases (part of which should result from the closing of numerous loopholes in our Byzantine
tax laws) and meaningful reductions in spending.”
(Ref. 7) Notice that I am not talking about tax reductions to the
middle class or anyone else. The hard truth is that we need to pay more taxes, not less.
We have spent more than we
have earned and its long since past when the piper must be paid. America must stop living in the Alice-in-Wonderland
fantasy world of entitlements where the government provides everyone with everything they want free of charge!
The time has come to sacrifice and accept short term pain in order to avoid long term disaster.

But, when all is said and done, let us not lose sight of the most important issue -
It’s still the debt, stupid! Any meaningful tax reform plan should keep
this fact in prominent view.